Summary
Vistra Corp. (VST) announced a material amendment to its existing credit facilities through its subsidiary, Vistra Operations Company LLC. This "Repricing Amendment," effective February 20, 2018, primarily focused on reducing the interest rate for a portion of its outstanding debt, specifically the $990 million 2016 Incremental Term Loans and Revolving Credit Loans. The amendment lowers the applicable margin, leading to an expected annual pre-tax interest expense reduction of approximately $5 million, partially offset by around $2 million in associated fees and expenses. This action indicates proactive debt management by Vistra, aiming to improve its cost of capital. Importantly, the amendment did not increase the company's overall debt levels or raise new capital. Investors should note that the larger tranches of debt, namely the $2.821 billion Initial Term Loans and $500 million Initial Term C Loans, remain unaffected by this interest rate reduction, continuing to bear their existing interest rates.
Key Highlights
- 1Vistra Operations Company LLC (a Vistra Energy subsidiary) entered into a Repricing Amendment to its Credit Agreement.
- 2The amendment, effective February 20, 2018, reduces interest rates on $990 million of 2016 Incremental Term Loans and Revolving Credit Loans.
- 3New interest rates will be LIBOR + 2.25% or Base Rate + 1.25% (at Vistra Operations' option).
- 4A further 25 basis point step down on 2016 Incremental Term Loans is possible if Moody's assigns a Ba1 or better corporate family rating.
- 5The amendment is expected to decrease annual pre-tax interest expense by approximately $5 million.
- 6No new debt was incurred or proceeds received; approximately $2 million in fees and expenses were incurred.
- 7Interest rates on the $2.821 billion Initial Term Loans and $500 million Initial Term C Loans remain unchanged.